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New IR35 office holder language ‘too broad,’ says trade body

A staffing trade body criticised Her Majesty’s Revenue & Customs recently, stating that the new IR35 office holder language is ‘too broad.’

Too many freelancers and contractors could end up being caught by the newly revised regulations designed to expose tax avoidance through disguised employment, says the Association of Recruitment Consultancies. While it is important to stamp out the kind of behaviour that does indeed lead to abuse of tax loopholes – as evidenced by the head of the Student Loan Company and his personal service company payroll scheme – the ARC says that passing the new proposed changes hat would bring office holders to bear under IR35 is an over-extension of the tax regulation.

The staffing and recruitment body took issue with the proposed language, which would lead to recruiters running afoul due to the expanded definitions of office holders. The commercial implications of more contractors and recruiters being included inside IR35 are such that hirers will face increased costs as freelancers and umbrella companies now must take into account their heightened tax burden, the association explained.

A better option, says the ARC, would be to amend the legislation’s language in order to more clearly define ‘office.’ It would also be helpful if the intention behind the new proposed language, and a more detailed explanation of its meaning, could be given by officials, according to Adrian Marlowe, chairman of ARC.

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